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Thursday, September 11, 2003

More for Less

Just googled into Eddie's latest piece over at Singapore's Straits Times. Keep up the good work! (BTW, have you noticed that the US administration wants to change the overtime rules).

Longer hours, fewer MCs - but it's not labour of love

By Eddie Lee

SOMETHING strange is happening in the workplace. In Germany, workplace absenteeism has fallen to its lowest level since reunification in 1990. Researcher Klaus Zok of the AOK public health fund told Frankfurter Allgemeine Zeitung in July that he had no doubt people are thinking twice about taking medical leave, even when they are quite ill. He based that conclusion on a study by the AOK's WIDO research unit, in which every second respondent said 'I'm worried about my job', while 74 per cent said fear of losing their job caused them to come to work even when they were very sick.

In the United Kingdom, one in six workers puts in more than 60 hours a week compared to one in eight just two years ago. The number of women working a 60-hour week has doubled during the same period. And while three-quarters of employees work overtime, only a third get extra cash for it. These are not phenomena arising from recent stagnant economic conditions, although that surely aggravated the situation.

A 1999 United States government study found that, on average, Americans work about eight weeks longer per year than a generation ago, for about the same income in real terms. But, as Ms Linda Rosenstock, director of The National Institute for Occupational Safety and Health noted, even as they work harder, 'more people are worried about being laid off'. Last week, a survey by the International Labour Organisation (ILO) found that the productivity gap between the US and the rest of the world widened last year - partly because American employees worked longer hours and took fewer holidays.

But despite the higher productivity and longer hours, the US economy's ability to create jobs deteriorated. The employment-to-population ratio in the US, which measures the proportion of an economy's working-age population that is employed, declined from 64.3 to 62.7 per cent during the period 1999 to 2002.

These trends point to an increasing polarisation of labour markets around the world. At one end are those full-time workers who have to work more intensively and for longer hours. At the other end are those who are unemployed or underemployed in part-time work. What all these add up to is a growing misallocation of work and leisure. Increasingly, people either have little leisure because of the amount of work they have to do, or have too much leisure because of the lack of work opportunities. Several factors contribute to the increase in work intensity. First, there is the decline in the bargaining position of workers to ask for shorter hours.

Employers, on the other hand, tend to demand long working hours. It is a reason why they are not inclined to favour flexible wages: Since wages are 'sticky' in the short term, every increase in work intensity or unpaid working hours represents a pure gain for employers. Longer hours mean fewer staff are needed for the same amount of work. Employers save on overheads like desks and computers.

Labour market policy has reinforced employers' hands. In Singapore, guidelines on wage bargaining stress the need for all wage increases to be justified by productivity gains. But not all industries are capable of productivity improvements at the same rate. In service industries, which have a lower capacity for productivity improvements, wage increases have to be justified by longer work hours.

A survey of 17 countries conducted earlier this year by the US-based Right Management Consultants found that employees in bigger economies are generally more downbeat about the job market and their careers than those in smaller economies, since hiring and firing are more freely practised in bigger economies. The exception was Singapore. The Right survey noted that, while tiny, Singapore has labour practices more akin to the bigger economies. Two in five middle and senior executives here live in fear of losing their jobs, among the highest ratio anywhere. The cost of this to the economy is seldom recognised. In the US, the American Institute of Stress estimates that it costs US industry a staggering US$300 billion (S$530 billion) a year in health costs and programmes to help workers manage stress.

A commitment to achieve substantial and sustained reductions in unemployment must be an immediate goal. There should be an attempt to improve working conditions that meet the needs and desires of workers rather than just the requirements of employers.

Just consider the hero worship of businessmen, which has reached cult status in this country. At last count, there were at least 13 awards for entrepreneurs. The Minister of State in charge of entrepreneurship, Mr Raymond Lim, believes 'the presence of more awards is a good thing as it underscores the growing social acceptance of entrepreneurs in Singapore'. Underlining the proliferation of such awards, ornamental fish breeder Kenny Yap was not even aware that he was in the running for the Most Creative Entrepreneur award until he received an SMS from a friend. Mr Yap remarked: 'People put my name up for a lot of awards, so I asked him which award this was.'

Contrast this with the state of employers. Thus far, there is little recognition at the national level for model employees. The only one that comes close is the award given by Hewitt Associates, which debuted two years ago. Just as entrepreneurs are being encouraged, shouldn't employers be encouraged to help their employees balance their work and home life, and adopt flexible and innovative work patterns? Recognising those who believe that such practices are good for their businesses can only be good for the economy.
Source: Straits Times
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About

Edward 'the bonobo' is a Catalan economist of British extraction based in Barcelona. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

He is currently working on a book with the provisional working title "Population, the Ultimate Non-renewable Resource".

Apart from his participation in A Fistful of Euros, Edward also writes regularly for the demography blog Demography Matters. He also contributes to the Indian Economy blog . His personal weblog is Bonobo Land . Edward's website can be found at EdwardHugh.net.